Foreign institutional investors (FIIs) continued to reduce exposure to Indian equities in January 2026, with the month recording the sharpest outflows since August 2025, according to sector-wise flow data compiled by Mannat Gandhi – Database Analyst at PL Capital.
After only one month of net inflows since July 2025 — in October — January 2026 saw net FII outflows of about ₹333 billion, reflecting cautious global sentiment and selective sectoral positioning.
The data shows a clear sectoral rotation in foreign investor flows, with defensive and consumption-oriented sectors witnessing heavy selling, while commodity-linked sectors attracted fresh capital.
Metals attract strong inflows
The metals and mining sector emerged as the biggest beneficiary, recording inflows of ₹115.3 billion in January 2026, far exceeding its long-term average inflow.
This sharp reversal from earlier outflows suggests renewed investor interest in commodity-linked sectors amid global macro uncertainty and demand expectations.
The capital goods sector also saw a reversal in trend, posting ₹27.6 billion in inflows in January, after consecutive months of outflows.
The chemicals sector continued to see modest inflows, broadly in line with its historical average.
Consumption sectors see heavy selling
Foreign investors reduced exposure significantly to consumption-oriented sectors.
The FMCG sector recorded one of the largest outflows at ₹74.97 billion in January, extending a pattern of persistent selling through recent months.
Similarly:
Consumer services saw outflows of ₹55.13 billion
Healthcare witnessed outflows of ₹61.62 billion
Consumer durables recorded outflows of ₹10.5 billion
These flows were significantly weaker than long-term averages, indicating a shift away from defensive sectors.
Financials and IT continue to see outflows
The financial services sector, which typically attracts large foreign flows, recorded ₹85.92 billion in outflows in January, though lower than earlier months.
The IT sector also remained under pressure, with ₹18.35 billion in outflows, continuing a broader trend of foreign selling since April 2025.
Auto, telecom and realty see selling pressure
Several cyclical sectors also witnessed sustained foreign outflows.
Automobile and auto components: ₹35.94 billion outflow
Telecommunication: ₹47.77 billion outflow
Realty: ₹26.55 billion outflow
Power sector: ₹18.67 billion outflow
While outflows moderated in some sectors compared with earlier months, they remained below long-term averages.
Debt-like and liquidity-sensitive sectors mixed
The oil and gas sector saw renewed outflows of ₹9.4 billion, while services and construction materials sectors continued to record negative flows, though at a slower pace.
The media and textiles sectors saw relatively small movements, broadly aligned with long-term trends.
A phase of sectoral reallocation
Overall, the data points to continued caution among foreign investors, with flows becoming increasingly selective rather than broad-based.
The sharp inflow into metals and continued selling in consumption, financials and technology sectors suggests a rotation toward commodity-linked opportunities and away from sectors sensitive to global growth uncertainty and valuations.
With global liquidity conditions, currency movements and interest-rate expectations continuing to evolve, sector-level FII positioning is likely to remain volatile in the near term.
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